The benchmark 10-year note was trading 1/32 higher in price for a yield of 4.07 percent against 4.08 percent late on Monday, while the two-year note -was 3/32 lower in price for a yield of 3.21 percent compared with 3.17 percent.

Earlier, treasury prices edged down as futures pointed to a higher opening for U.S. equities, curbing the robust flight-to-safety bid that had pushed U.S. government bond yields to two-year lows on Monday.

However, investors remained jittery about the exposure of big banks and mortgage companies to housing-related securities, which may limit Treasurys losses.

"You are seeing a see-saw between the equity market and the Treasury market," said Doug Roberts, chief investment strategist with Channel Capital Research in Shrewsbury, New Jersey.

"Treasurys may not give back their (recent) gains as quickly as some people mention. There is fear in the equity market," said Roberts. With gold appearing to have hit a near-term peak, investors are increasingly favoring Treasurys as one of the few available safe-havens from riskier assets, Roberts added.